Tax Relief Package Promotes Growth, Rewards Fiscal Irresponsibility,
and Increases Taxes
For Immediate Release.
May 19, 2003 The Senate,
on May 15, 2003, passed the Jobs and Growth Tax Act of 2003 (S.2) by
a 51-49 vote that provides $350 billion of tax relief over ten years.
The measure would reduce the tax individuals pay on dividend
income for 2003 by 50 percent and eliminate it from 2004 to 2006. (However, the tax would be reinstated in 2007)
Also, $20 billion in aid is included in this bill for the states.
Of this money allocated to the states, 50 percent is for Medicaid. To spur business investment the Senate measure
adopted the House’s provision allowing small businesses to offset capital
expenses by allowing them to deduct up to $100,000 annually for the
next five years. The tax credit for each child would be increased from
the current $600 to $1,000. The
income tax reductions would be accelerated just as they were in the
House plan, but the Senate measure does not go as far as the House bill
on the marriage penalty. And
from high user fees and closing existing tax relief, the Senate increased
taxes by $92 billion. For example, the bill eliminates the law that
allows American workers overseas the exemption of $80,000 of their income from taxation.
The Senate should be
commended for their effort for eliminating the unfair double taxation
on dividend income. However,
the temporary suspension or sunset of the tax does not address the problem
with this unfair tax. “The strategy
that the Senate Republican’s have taken on eliminating the tax on dividends
is bold,” said Dr. Joel P. Rutkowski, president of the American Voice
Institute of Public Policy. “It
is their hope that the reduction and then the temporary elimination
of the taxation on dividends will start to stimulate the economy and
create an economic environment that will cause businesses to hire employees.
Once their premise is valid that tax relief promotes economic
growth, they can then encourage voters to elect more Republicans that
believe in pro-growth tax policy, so they can continue to provide more
tax relief to the hard-working and overtaxed American worker,” added
On the other hand,
the Senate measure rewards states for their fiscal irresponsibility
by providing $20 billion in new spending. Federal
tax dollars should not be used to foster states’ spending sprees. States have been complaining that they are
facing the deepest fiscal crisis since the Second World War. Yet the latest Commerce Department data demonstrates
that, compared to the same period last year, revenues have increased
in the first three months by 5.4 percent. Furthermore, by increasing outlays by six percent they have spent
that, and this is spending in addition to a 13.4 percent increase between
2000 and 2002.
Finally, it is wrong
for the Senate to shift the tax burden from one group to the other that
will do nothing to stimulate the economy.
If the Senate truly wanted to stimulate the economy they would
stop using the same old excuse of how will we pay for this tax relief
package. “Senators, as well as Congressmen, routinely suffer from memory
lapses that it is not their money but the hard earned tax dollars of
the American worker that are being taken. And if they would stop overspending
on wasteful federal programs, they could easily return the taxpayers’
money back to them through real and pro-growth tax relief,” said Dr.
Joel P. Rutkowski.
Joel P. Rutkowski, P.h.D.
President, The American Voice Institute Of Public Policy
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